SOURCES AND METHODS OF FOREIGN NATIONALS ENGAGED IN ECONOMIC AND
MILITARY ESPIONAGE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON IMMIGRATION,
BORDER SECURITY, AND CLAIMS
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 15, 2005
__________
Serial No. 109-58
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
______
U.S. GOVERNMENT PRINTING OFFICE
23-433 WASHINGTON : 2005
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COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah MAXINE WATERS, California
SPENCER BACHUS, Alabama MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida
MARK GREEN, Wisconsin ANTHONY D. WEINER, New York
RIC KELLER, Florida ADAM B. SCHIFF, California
DARRELL ISSA, California LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
Philip G. Kiko, General Counsel-Chief of Staff
Perry H. Apelbaum, Minority Chief Counsel
------
Subcommittee on Immigration, Border Security, and Claims
JOHN N. HOSTETTLER, Indiana, Chairman
STEVE KING, Iowa SHEILA JACKSON LEE, Texas
LOUIE GOHMERT, Texas HOWARD L. BERMAN, California
LAMAR SMITH, Texas ZOE LOFGREN, California
ELTON GALLEGLY, California LINDA T. SANCHEZ, California
BOB GOODLATTE, Virginia MAXINE WATERS, California
DANIEL E. LUNGREN, California MARTIN T. MEEHAN, Massachusetts
JEFF FLAKE, Arizona
BOB INGLIS, South Carolina
DARRELL ISSA, California
George Fishman, Chief Counsel
Art Arthur, Counsel
Allison Beach, Counsel
Luke Bellocchi, Full Committee Counsel
Cindy Blackston, Professional Staff
Nolan Rappaport, Minority Counsel
C O N T E N T S
----------
SEPTEMBER 15, 2005
OPENING STATEMENT
Page
The Honorable John N. Hostettler, a Representative in Congress
from the State of Indiana, and Chairman, Subcommittee on
Immigration, Border Security, and Claims....................... 1
The Honorable Sheila Jackson Lee, a Representative in Congress
from the State of Texas, and Ranking Member, Subcommittee on
Immigration, Border Security, and Claims....................... 2
The Honorable Zoe Lofgren, a Representative in Congress from the
State of California, and Member, Subcommittee on Immigration,
Border Security, and Claims.................................... 5
WITNESSES
The Honorable Michelle Van Cleave, National Counterintelligence
Executive, Office of the Director of National Intelligence
Oral Testimony................................................. 7
Prepared Statement............................................. 10
Dr. Larry Wortzel, Visiting Fellow, The Heritage Foundation
Oral Testimony................................................. 19
Prepared Statement............................................. 21
Mr. Maynard Anderson, President, Arcadia Group Worldwide, Inc.,
and former Deputy Under Secretary of Defense for Security
Policy
Oral Testimony................................................. 23
Prepared Statement............................................. 25
Dr. William A. Wulf, President, National Academy of Engineering,
The National Academies
Oral Testimony................................................. 30
Prepared Statement............................................. 34
APPENDIX
Material Submitted for the Hearing Record
Map on the ``Number of Patent Applications and Foreign Students
Per County,'' submitted by the Honorable John Hostettler, a
Representative in Congress from the State of Indiana, and
Chairman, Subcommittee on Immigration, Border Security, and
Claims......................................................... 57
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Ranking
Member, Subcommittee on Immigration, Border Security, and
Claims......................................................... 58
New York Times Article submitted by the Honorable Zoe Lofgren, a
Representative in Congress from the State of California, and
Member, Subcommittee on Immigration, Border Security, and
Claims......................................................... 59
The National Counterintelligence Strategy of the United States,
submitted by the Honorable Michelle Van Cleave, National
Counterintelligence Executive, Office of the Director of
National Intelligence.......................................... 61
Revised Prepared Statement of Dr. Larry M. Wortzel, Visiting
Fellow, The Heritage Foundation................................ 75
SOURCES AND METHODS OF FOREIGN NATIONALS ENGAGED IN ECONOMIC AND
MILITARY ESPIONAGE
----------
THURSDAY, SEPTEMBER 15, 2005
House of Representatives,
Subcommittee on Immigration,
Border Security, and Claims,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:26 p.m., in
Room 2141, Rayburn House Office Building, the Honorable John
Hostettler (Chairman of the Subcommittee) presiding.
Mr. Hostettler. The Subcommittee will come to order.
We pride ourselves on being an open society in America. We
allow millions of foreign nationals to come to our shores each
year as tourists, business visitors, and students.
Unfortunately, some of these business visitors have come here
to take advantage of our openness and engage in economic and
military espionage.
Earlier this morning in a closed session, the Subcommittee
heard a disturbing report given by the Nation's top
counterintelligence official regarding economic and military
espionage by foreign nationals in the United States. We will
shortly hear a sanitized version of this testimony.
In the past few months alone: American University
researcher and Chinese national Zhan Gao pled guilty to
illegally exporting technology that can be used in missile
guidance and airborne battle management systems for a $590,000
payment from China. Chinese nationals, Jian Guo-qu and Ruo Ling
Wang, were arrested in Milwaukee for conspiring to illegally
export more than $500,000 in restricted electronic military
radar components to China. Iranian Abbas Tavakolian was
sentenced to 57 months incarceration for attempting to export
F-4 and F-14 jet parts to Iran. Kwonhwan Park, a Korean
national, pled guilty in November to illegally exporting Black
Hawk helicopter engines to China through a Malaysian front
company.
Month after month, publications such as TIME magazine and
the Washington Times have run stories concerning the theft of
critical American technologies by foreign nationals embedded at
research facilities.
Nationals of many nations come to the United States to
engage in espionage. Our closest allies are not excluded from
this list. However, all evidence indicates that certain nations
are the most egregious violators.
There is no nation that engages in surreptitious illegal
technology acquisition for purposes of both commercial piracy
and military advancement on a scale that approaches that of the
People's Republic of China.
The Wall Street Journal reported last month that thousands
of Chinese military front companies are operating in the United
States--some as contractors for the United States military--and
that hundreds of thousands of Chinese tourists, business
executives and students entered the United States last year.
Many of these visitors, even when they are visiting for
legitimate purposes, are tasked with obtaining whatever
technological information they can.
There are currently at least 115 students here from China,
studying nuclear engineering, and thousands more studying
computer, electrical, civil and chemical engineering. As an
engineer myself, I must ask how can we be sure that they are
not bringing back American technological secrets to their home
country?
And what about Iran, a country we suspect of endeavoring to
make nuclear weapons? There are now at least four Iranian
nationals actively studying nuclear engineering in the U.S.,
according to the Department of Homeland Security, as well as
350 electrical engineers, 12 biochemists and a host of other
Iranian students studying in technical fields here.
What is true of all these individuals is that they came to
the United States after being approved for visas. They undergo
Visa Mantis security checks which are designed to weed out
those visa applicants likely to use these visits to the U.S. to
acquire sensitive technology.
However, the State Department's focus over the last several
years seems to have been devoted to reducing the inconvenience
of the Visa Mantis security checks for visa applicants as much
as possible and to be as generous as possible in the issuance
of multiple-entry visas.
Now, we all want to facilitate the swift issuance of visas
to legitimate applicants. But, I am concerned that we might not
be paying adequate attention to the inherent security risks,
that we may be being generous to a fault. At jeopardy are our
military superiority and our economic competitiveness.
Today we will ask a number of questions including: what can
be done to enhance the existing security systems in place to
track foreign nationals at our research facilities? Do
background checks for visa applicants need to be improved? And
should aliens suspected of being involved with piracy or
illegal technology transfer be automatically ineligible for a
visa to the United States?
At this time I turn to my colleague, the Ranking Member
from Texas, Ms. Jackson Lee, for purposes of making an opening
statement.
Ms. Jackson Lee. Thank you very much, Mr. Chairman, I want
first of all to associate myself with the intent of this
hearing and what I believe the Chairman's intent is and, of
course, associating myself and joining him with that intent,
the purpose of this hearing. That would be the legislative road
map, the guidepost, if you will, to help us effectively become
the America that we all know and have come to love; a country
that respects both the investment--both investment and, of
course, the contributions that immigrants have made over the
long history of this Nation.
I have always begun these hearings over the last year that
I have had the honor of serving my colleagues and the American
people, saying that we are a nation of immigrants and a nation
of laws, and of course, that immigrants do not equate to
terrorists.
So as we look to the witnesses who are before us, let me
ask you to keep in mind that it would be, I believe, an
impractical nonreality to suggest that we would close the door
to all students, all researchers, and all nationals,
international persons attempting to do business in the United
States.
The subject of this hearing is foreign nationals engaged in
economic and military espionage. According to the National
Counterintelligence Executive report to the Congress this year,
individuals from almost 100 countries attempted to acquire
sensitive United States technologies in fiscal year 2004.
The report concludes that foreign access to sensitive
information with both military and conventional applications
has eroded the United States military advantage and the greater
U.S. intelligence community's ability to provide information to
policymakers and undercut U.S. industry. It goes to my point
that we must separate sort of the weak from whatever else is
engaged.
It is interesting that when all of us travel aboard--abroad
on behalf of our respective Committees, particularly in this
instance, the Homeland Security Committee that I am also on,
are also interacting with heads of government who are thanking
you for the opportunity of many of their own nationals to
engage in training activities and opportunities--and research
opportunities with those in the United States.
You will constantly hear from your constituents, mostly in
the medical and science professions, technology professions,
the importance of the exchange and the ability to interact with
those from other countries. This report states, however, that
we are vulnerable to espionage because the United States has
provided foreign entities with easy access to sophisticated
American technologies.
Many people thought that we were on the wrong side of the
issue when many of our voices rose to oppose the sale of
Unocal to a Chinese energy company. I happen to be one of
those, and I come from what is called the energy capital of the
world, but frankly I do believe there should be a fire wall in
terms of important technology--and had the opportunity to speak
to the head of China's petroleum company at the time that the
sale was being pulled, if you will, and indicated that we hope
we have the opportunity to do other business efforts with that
company, but there had to be a line in the sand on important
technologies.
New electronic devices have vastly simplified the illegal
retrieval of storage information, of massive amounts of
information, including trade secrets and proprietary data.
Globalization has mixed foreign and American companies in ways
that have made it difficult to protect the technologies that
these firms develop or acquire, particularly when that
technology is required for overseas operation.
Mr. Chairman, I just a few days ago took my son back to
college, interacted with a few college students for a couple of
hours, not a whole day, but I was amazed with the level of
sophistication and the eagerness to come back and use either
the school's technology or their own to develop new expertise--
maybe something like what Bill Gates did a decade or more ago--
dealing with now the new Microsoft, this new technology called
Facebook, which the college students themselves designed.
We know technologies are being fostered all over America,
and the simplicity of being able to access some of our most
delicate information is something we should be concerned about.
Lastly, sophisticated information systems that transmit--
store and transmit systems have become increasingly vulnerable
to cyber attacks, an issue that my colleague Congresswoman
Lofgren has been a leading force on. Apparently, the
counterintelligence community is uncertain about exactly how
much of its intelligence collection effort--some intelligence
collection effort is directed by foreign governments and how
much is carried out by private businessmen and women, academics
or scientists, for purely commercial or scientific purposes.
It is clear, however, that some foreign governments do
employ state actors. This includes their intelligence services
as well as commercial enterprises.
Most of the foreign governments that are attempting to
acquire American technology employ tools and techniques which
are easy to use, inexpensive, low risk and sometimes legal. In
most cases, foreign collectors simply ask for the information
by e-mail, a phone call, a fax, a letter or in person. The
report asserts further that increased demand for foreign labor
in the United States, high-tech industries and the sharp rise
in foreign investment in the United States over the past decade
have given foreign governments increased access to American
businesses and consequently to U.S. trade secrets.
In addition, recognizing neutral benefits of an unhindered
exchange of information, the United States has opened its
military bases, national laboratories and private defense
suppliers to foreign visitors.
Mr. Chairman, I am going to ask that the entirety of this
statement be submitted as I come to a close, and I ask
unanimous consent that the rest of my statement be submitted
into the record.
Mr. Hostettler. Without objection.
Ms. Jackson Lee. But let me conclude by saying, we know the
problems, but we also know the value and the benefits that have
been received by the American people that have been our long-
standing commitment and our values to the opportunity of
bringing those who are persecuted to the shores, but also those
who have talent, who are contributors and those who just have
brawn, who have literally built America.
Let us not close the door to the opportunity of foreign
students who--again, as I met with in meetings in China and
elsewhere, who have learned both our democratic principles but
also to share in technology and the ability to build systems
that will benefit not China, not Germany, not the new Iraq, not
South and Central America or the continent of Africa, but
humanity. Let us not in our effort to avoid the transmittal of
important technologies and important concepts here in America,
not draw technology--draw legislation so restrictive, Mr.
Chairman, that we cannot find a way to ensure that America
benefits from the talent of this world. And let us make sure
that the legislation is reflective of the security needs, but
also the needs of the American people to be a friend to the
world. And I yield back.
Mr. Hostettler. I thank the gentlelady.
Do any other Members have opening statements?
Ms. Lofgren. Mr. Chairman, I will not take the full 5
minutes.
Mr. Hostettler. I recognize the gentlelady from California.
Ms. Lofgren. Clearly, every Member of Congress is
interested, concerned and opposed to espionage in our country.
So that is a given. The question is how to protect ourselves
without doing damage to ourselves, and I think it is important
to recall. I was in elementary school in 1957 when Sputnik went
up, and we got a little wake-up call that the country was in
trouble and we were in a huge competition with the Soviet
Union, and we were behind. We pulled up our socks, and we
ultimately won that competition.
I think in a way we are in a similar spot today, the
American Electronic Association used this phrase: It is the
difference between then, which was throwing the frog in the
boiling water; now the frog is in the water as it heats up, and
a lot of Americans don't realize that we are in this
competition that is very serious in terms of science and
technology and engineering talent. We have slipped in the
number of engineering Ph.D.'s awarded in this country. We are
falling behind; India and China and the EU are emerging as ever
more vibrant competitors.
The AEA--again, they just did a terrific report--cite the
U.S. graduating 60,000 engineers a year, India graduating
82,000 engineers a year, and China graduating four times as
many engineers a year as the United States.
Now, the Ph.D. level--the National Academy of Sciences
tells us that 65 percent of the Ph.D. candidates in engineering
are foreign students, and many of them stay on and become
Americans with us, and that benefits us greatly. In fact, I
come from Silicon Valley, and about 40 percent of the start-ups
in Silicon Valley are from people who were born someplace else
and became Americans.
And so we need to keep in mind that if we have to have
strength in systems to make sure that we are protected, that we
don't end up shooting ourselves in the foot economically, and I
would say also militarily, because the new Americans, the best
and brightest, also help immensely in terms of the technology
that ultimately is used, not just in the commercial world, but
also in the defense effort.
I hope that as we talk further about this, we can think
about what systems we might put in place, smart systems, so
that rather than creating bulky systems that have the result of
deterring people we might want to have come in, and maybe not
deterring the bad guys, we come up with streamlined systems
that really target what we need in a way that is efficient and
does not do damage.
So that is what I am very interested in, and I yield back
the balance of my time.
Mr. Hostettler. I thank the gentlelady.
Without objection, all Members will have--will be allowed
to have their opening statements be made a part of the record.
Mr. Hostettler. At this time, I would like to introduce
Members of our panel.
Michelle Van Cleave is the National Counterintelligence
Executive and, as such, she is the country's top
counterintelligence official and is charged with integrating
and providing strategic guidance for counterintelligence
activities across Government. She reports directly to the
Director of National Intelligence, John Negroponte, the
President's principal intelligence advisor.
In the 105th Congress, Ms. Van Cleave was Chief Counsel for
the Senate Judiciary Subcommittee on Technology, Terrorism and
Government Information.
In 1989, she served on the House Science Committee staff
and was later Assistant Director in the White House Office of
Science and Technology Policy. She has also held senior
positions at the Department of Defense and is a graduate of the
University of Southern California Law School.
Dr. Larry Wortzel has been at the Heritage Foundation since
1989 and has served as Asia Studies Director. He is a former
Marine, Army Airborne Ranger and Army Colonel, and has worked
for the Under Secretary of Defense for Policy to develop
counterintelligence programs. In 1970, he served in the U.S.
Army intercepting Chinese military communications in Vietnam
and Laos. Later, his career took him to areas throughout Asia
under U.S. Pacific Command and as U.S. Army Attache at U.S.
Embassy Beijing during the Tiananmen massacre, and in 1995.
Dr. Wortzel is the author of numerous books on Chinese
military strategy and received his Ph.D. at the University of
Hawaii.
Mr. Maynard Anderson is President of Arcadia Group
Worldwide, Incorporated. He has served in Government as Deputy
Under Secretary of Defense for Security Policy with the
responsibility of setting disclosure policy. In 1988, he served
as Assistant Deputy Under Secretary of Counterintelligence of
the Department of Defense, setting security policy and
providing day-to-day oversight.
Mr. Anderson also chaired the National Foreign Disclosure
Policy Committee. Privately, he served as Chairman of the
National Intellectual Property Law Institute Board of
Directors. Mr. Anderson is a graduate of Luther College in Iowa
and the Federal Executive Institute.
William Wulf is President of the National Academy of
Engineering and Vice Chair of the National Research Council. He
is on leave from the University of Virginia, where he is AT&T
Professor of Engineering and Applied Sciences. Mr. Wulf has
served as Assistant Director of the National Science Foundation
and Chief Executive Director of Tartan Laboratories, Inc., in
Pittsburgh. He was also a Professor of Science at Carnegie
Mellon University. He has authored more than 100 technical
reports, has written three books and holds two U.S. patents.
At this time, will the witnesses please rise to take the
oath.
[Witnesses sworn.]
Mr. Hostettler. Thank you. You may be seated. Please let
the record show that each of the witnesses answered in the
affirmative.
Ms. Van Cleave, you are recognized for purposes of an
opening statement.
TESTIMONY OF THE HONORABLE MICHELLE VAN CLEAVE, NATIONAL
COUNTERINTELLIGENCE EXECUTIVE, OFFICE OF THE DIRECTOR OF
NATIONAL INTELLIGENCE
Ms. Van Cleave. Thank you, Mr. Chairman. I do have a
prepared statement I would like to submit for the record.
Mr. Hostettler. Without objection.
Ms. Van Cleave. Please let me summarize a few points.
I appreciate very much the opportunity to appear before you
today to discuss foreign intelligence threats to U.S. national
intelligence security and our economic well-being.
Since some of the Members of the Subcommittee may not be
familiar with my office, I would like to take a moment to
describe my duties. In the post-Cold War world, the U.S.
confronts intelligence challenges from a broad array of foreign
nations. The singular global Soviet threat of decades gone by
has been succeeded by a diverse set of adversaries, many of
whom have become highly skilled in using their intelligence
services, especially their human collectors, to acquire U.S.
national security secrets. These include the technological and
engineering secrets that give our Armed Forces the qualitative
edge they may need to prevail in a dangerous world.
While the threats against us are strategic, historically
the U.S. counterintelligence community has not been organized
or integrated to accomplish a national strategic mission. On
the contrary, the various counterintelligence elements have
long been part of a loose confederation of independent
organizations with different jurisdictions and capabilities and
no one in charge of the enterprise.
CI operations and investigations have tended to focus on
individual cases with little appreciation of synergy or their
larger strategic implications. This structural flaw has
undercut our ability to connect the dots of intelligence
anomalies or effectively coordinate the different CI arms of
our Government. To help remedy this situation, the Congress
created the position of the National Counterintelligence
Executive, or the NCIX. The law directs that the NCIX shall
serve as the head of counterintelligence for the U.S.
Government, subject to the direction and control of the
Director of National Intelligence.
I am the first NCIX appointed by the President. It is my
job to provide strategic direction to our Nation's
counterintelligence efforts and to assure the integration of
the disparate CI activities of our Government. It also includes
the counterintelligence dimension to broad national security
concerns such as the protection of our Nation's critical
technologies.
The primary focus of counterintelligence is to defeat the
efforts of foreign intelligence services to acquire U.S.
national security secrets. It is also our job to supply CI
insights and options to the President and his national security
leadership. This includes supporting the overall national
effort to stem the outflow of sensitive technologies, including
export controls, diplomatic measures, controls on foreign
investments in sensitive sectors of the U.S. economy and
industrial security agreements.
I want to emphasize that by far the vast majority of
foreign acquisition of U.S. technology is open and lawful, as
are the transactions of individuals and businesses involved in
international commerce, as well as the free exchange of ideas
in scientific and academic forums. But let me turn to the cases
that fall outside the bounds of what is open and lawful.
Last year, the counterintelligence community tracked
efforts by foreign businessmen, scientists, academics, students
and government entities from almost 100 countries to acquire
sensitive U.S. technologies protected by export laws or other
means. Of those, the top 10 countries accounted for about 60
percent of the suspicious foreign collection efforts against
cleared defense contractors. Two of the countries that always
rank near the top of the list are, of course, Russia and China,
who have particularized interests, especially in dual-use
technologies with military applications.
But the top 10 also include some of our close allies, as
you noted, Mr. Chairman. These allies may exploit their easy
access to push the envelope into areas where they have not been
invited.
In the majority of cases, foreign collectors simply ask. By
e-mail or phone calls or faxes or letters or in person they ask
for the information or technology that they are interested in.
Or they may exploit visits to U.S. businesses or military
bases, national laboratories and private defense suppliers to
extract protected information.
U.S. businessmen and scientists and academics traveling
abroad provide another valuable source of information for
foreign countries, as do foreign students, scientists and other
experts who to come to the U.S. to work or attend conferences.
One indirect method used to acquire technology is for
foreign firms to offer their services or technology,
particularly IT-related support, to firms who have access to
sensitive items.
On this point, I should note that the use of cyber tools,
as a collection technique, is of growing concern. As you know,
cyber exploitation is inherently difficult to detect, as cyber
intruders from one country will typically cover their tracks by
mounting their attacks through compromised computers in other
countries.
Finally, state-directed espionage: State-directed espionage
remains the central threat to our most sensitive national
security technology secrets.
While the Chinese, for example, are very aggressive in
business and good at solicitation and good at positioning
themselves for strategic investments, and they are adept at
exploiting front companies, they also have very capable
intelligence services that target U.S. national security
secrets. As the Cox Commission report made clear over a decade
ago, the Chinese did not acquire the most sensitive secret U.S.
nuclear weapons designs by spending late nights at the library.
It is one thing to describe these threats to you; it is
quite another to describe what we need to do about them. We
will never have leak-proof technology controls, just as we will
never have enough security to protect us against all the
threats all the time. Nor would we want to exchange the vast
blessings of our free society for a security state.
In my view, good security is not the answer alone. We also
must have good counterintelligence, meaning that we must be
more proactive in identifying, assessing and degrading foreign
intelligence operations against us. We need to prioritize our
efforts against the most serious threats to U.S. national
security and our vital defense and foreign policy objectives.
Now, in March of this year, President Bush approved the
first national counterintelligence strategy of the United
States, which I would like to submit for the record, if I may,
Mr. Chairman.
Mr. Hostettler. Without objection.
Ms. Van Cleave. It is the first mission statement of
counterintelligence as an instrument of U.S. national security
policy. This is a very different concept of counterintelligence
than the common perception of catching spies and putting them
in jail. Counterintelligence encompasses all activities to
identify, assess and degrade foreign intelligence threats to
U.S. national security and our foreign policy objectives. And
central to the President's strategy is the call for U.S.
counterintelligence to be proactive.
Now, this Committee has jurisdiction over America's single
greatest resource for encountering intelligence threats, the
Federal Bureau of Investigation. In the months to come, the FBI
will be standing up a new national security branch that will
span its responsibilities for counterterrorism, intelligence,
and counterintelligence.
Building on Director Mueller's efforts to date, the full
integration of these disciplines should enable the FBI to
recruit, train and develop a new generation of agents and
support personnel dedicated to its core national security
mission. And more complete integration of the FBI with sister
counterintelligence agencies will augment our nation's ability
to protect against the most serious foreign intelligence
threats.
In closing, Mr. Chairman, I would like to thank you very
much for this timely hearing, and I welcome your questions.
Mr. Hostettler. Thank you, Ms. Van Cleave.
[The prepared statement of Ms. Van Cleave follows:]
Prepared Statement of the Honorable Michelle Van Cleave
Mr. Hostettler. Dr. Wortzel.
TESTIMONY OF DR. LARRY WORTZEL, VISITING FELLOW,
THE HERITAGE FOUNDATION
Mr. Wortzel. Mr. Chairman, Members of the Committee, thank
you for the opportunity to testify today on the theft of
national security secrets and national security sensitive
technology. I have a longer statement I would like to submit
for the record, if I may.
Mr. Hostettler. Without objection.
Mr. Wortzel. I will focus on the intelligence collection
posed by China. The manpower pool available to the Chinese
Government and its intelligence services is nearly limitless,
and it is impossible to know for certain if people are here to
study for research or if they are here to steal our secrets.
The People's Republic of China is methodical in its program
to gather information from abroad. In 1986, the People's
Republic of China launched a national high technology research
and development program with the specific goal of benefiting
China's medium and long-term high technology development.
This is a centralized program; it is known as the 863
Program for the date it was announced, and it allocates money
to experts in China to acquire and develop things like
biotechnology, space technology, laser technology, and advanced
materials. Thousands of Chinese students and scientists were
sent abroad by China over the years to pursue critical, civil
and military dual-use technologies, and the practice still
continues. Thus, the U.S. faces an organized program out of
China that is designed to gather high technology information of
military use.
Now, today, inside China, there are entire high technology
incubator zones that are designed to attract back students from
the U.S. or U.S. businesses to bring technology in. It is very
important to recognize that Chinese diplomatic missions abroad
monitor the activities of their businessmen and students to
cultivate informants, and before Chinese citizens get passports
or travel permission, they are often interviewed by China's
intelligence security services and sensitized to intelligence
collection requirements.
I think it is important to remember that the constitution
of the People's Republic of China characterizes the state as a
people's democratic dictatorship. So it is pretty hard for
legal travelers to simply turn down the Chinese Government in
that authoritarian state when they get asked to cooperate.
Now, we know from Chinese defectors and Chinese security
officials, or diplomats in places like Australia and Canada
recently, that this approach is used not only to collect
intelligence in the United States, but also abroad.
In 2003, the State Department approved some 700,000 visas
for visitors from China to the United States. That includes
about 135,000 students. That is just a lot of folks. There were
40,000 immigrant visas granted to Chinese citizens in 2003. I
have to say that these numbers make it impossible for the
Federal Bureau of Investigation to vet every one of these
people. There are some 3,200 Chinese front companies operating
in the United States.
Now, the People's Liberation Army of China went into the
business of starting companies to bring in technology in the
1970's, late 1970's and 1980's. The General Equipment
Department started Polytechnologies; the General Political
Department, started Kaili or Kerry Corporation, Baoli, the
logistics department started Xinshidai, or the New Era
Corporation; and these are separate legal entities, not part of
the military, but they were authorized to conduct these
activities by the Central Military Commission of the Chinese
Communist Party.
They were originally manned by former officers of PLA or
their families, in some case active officers, and they operated
branches in the United States. They regularly brought
delegations to the U.S. to bring in technology, and today they
have turned into global conglomerates that have spawned some of
those 3,200 companies that are operating in our country.
So the Chief of FBI Counterintelligence Operations, David
Szady, recently said that these companies are operating in such
places as Milwaukee, Trenton, New Jersey, and Palo Alto.
Now, I think that the Government, the U.S. Government
security intelligence and law enforcement agencies have to
focus on national security information. They ought to be
looking for violations in the Arms Export Control Act, or the
Export Administration Act, but when it comes to corporate or
industrial espionage, proprietary secrets, that is not national
security.
It may be an economic problem for the United States, but I
think that there the Government owes American companies a good
legal infrastructure to protect patents, copyrights and
trademarks; a system of education on industrial security here
in our country; and a strong effort to ensure that China meets
its own obligations to create a rule of law that protects the
rights of ownership and intellectual property. But we shouldn't
cross over into losing--given the number of people, into losing
our focus on national security.
From the standpoint of congressional action, I would point
out that the Export Administration Act expired in 2001; it was
a 1979 act. It needs to be revised to take account of the needs
of 21st century technology. The Senate passed a revision in
2001; the House did not. I think the Executive Branch has to
regularly review the Commodity Control List to ensure that
appropriate national security controls on exports do not unduly
restrict the ability of American industry to compete in the
world market.
Generally speaking, I think that technologies that are
widely available in the world market and not unique to the
United States should not be restricted and subject to export
controls unless they can be multilateral controls. I would also
recommend that visa officers get educated by the intelligence
community so that things like the Visas Mantis program, and the
technology alert list, can work effectively. They have a lot of
prerogatives when they are out in the embassy.
Let me close by saying that I don't think it pays for us to
be paranoid and suspect that every traveler, student and
businessman from China, or woman from China, is a spy or is out
to steal technology. Prudent law enforcement programs,
counterintelligence programs, security education and industrial
security programs are important ways to protect our Nation. But
I would note that in places like Taiwan, the Republic of China
and South Korea, it is these students that came out and learned
and went back home that changed the political system there and
created a rule of law and democracy, and that could someday
happen in China. In the meantime, I do think we need to be
vigilant.
And I thank you for the opportunity to testify today.
Mr. Hostettler. Thank you, Dr. Wortzel.
[The prepared statement of Dr. Wortzel follows:]
Prepared Statement of Larry M. Wortzel
Mr. Chairman, Members of the Committee,
Thank you for the opportunity to testify today on the theft of
national security sensitive technology in the United States. As a
former military intelligence officer who has tracked the activities of
the People's Liberation Army and Chinese intelligence services for 35
years, I know of no more pervasive and active intelligence threat to
America's national security than that posed by the People's Republic of
China. The manpower available to the Chinese government and its
corporations to devote to gathering information in the United States is
nearly limitless. There are some 300,000 visitors to the United States
from China each year. It is impossible to know if these people are here
for study and research or if there are here to steal our secrets.
In 2003, for example, the State Department granted about 27,000
visas to Chinese ``specialty workers,'' the H1-B visa. Some of these
were intra-company transfers coming to the United States from US firms
operating in China. Indeed, between 1993 and 2003 there were about
40,000 immigrant visas from China a year. The US government has handled
about 2,410 asylum cases from China a year. In 2003, there were about
55,000 student visas granted to Chinese students. The sheer magnitude
if these numbers presents a great challenge to the Federal Bureau of
Investigation, particularly when the US is also concerned about
terrorism.
The General Political Department of the People's Liberation Army
has a proprietary company, Kaili, or Kerry Corporation, that operates
in the U.S. as a real estate and investment company. The General
Equipment Department of the PLA operates a proprietary company,
Polytechnologies, which has offices here in the U.S. In addition, the
Chinese Defense, Science, Technology and Industry Commission operate a
proprietary called Xinshidai, or New Era, that has offices in our
nation. These technically are independent legal entities, but they were
established by the Central Military Commission of China to serve the
interests of the military industrial complex. The PLA regularly
operates trade fairs to attract American high technology into China.
The Deputy Undersecretary of Defense for Technology Security and
Counterproliferation has testified that there are between 2,000 and
3,000 Chinese front companies operating in the United States to gather
secret or proprietary information, much of which is national security
technology or information.
The nature of the Chinese state complicates the problem of knowing
what the large numbers of travelers and students from China are
actually doing. China is still an authoritarian, one-party state led by
the Chinese Communist Party with a pervasive intelligence and security
apparatus. The Chinese government is able to identify potential
collectors of information and, if necessary, to coerce them to carry
out missions on behalf of the government because of the lack of civil
liberties in China. Let me quote the first three sentences of Chapter
1, Article 1, of the Chinese Constitution: ``The People's Republic of
China is a socialist state under the people's democratic dictatorship
led by the working class and based on the alliance of workers and
peasants. The socialist system is the basic system of the People's
Republic of China. Disruption of the socialist system by any
organization or individual is prohibited.''
The People's Republic of China is methodical in its programs to
gather information from abroad. In March 1986, the PRC launched a
national high technology research and development program with the
specific goal of benefiting China's medium and long-term high
technology development. This centralized program, known as the ``863
Program'' for the date when it was announced, allocates money to
experts in China to acquire and develop bio-technology, space
technology, information technology, laser technology, automoation
technology, energy technology and advanced materials. The 863 program
was proposed by China's strategic weapons scientists to emphasize
strategic civil and military technology development. Thousands of
students and scientists were sent abroad by China over the years to
pursue critical civil and military, dual-use technologies. This
practice still continues. When I was at the American Embassy in China
and conducted due diligence checks to confirm the nature of Chinese
companies seeking to do high technology business in the United States I
most often found that the address identified for a company on a visa
application turned out to be a People's Liberation Army or PRC
government defense research institute. Thus, the United States faces an
organized program out of China that is designed to gather high
technology information of military use.
My colleague today, Mr Maynard Anderson, will discuss some of the
ways that our government and industry can defend against intelligence
gathering by China through defensive counterintelligence and security
education programs. It is also important to know that we have other
programs to screen out people coming to the United States to gather our
trade or military secrets. In January 1998, the VISAS MANTIS program
was developed to assist the American law enforcement and intelligence
communities in securing U.S.-produced goods and information that are
vulnerable to theft. Travelers are subject to a world-wide name-check
and vetting procedure when they apply for visas. The security
objectives of this program are to prevent the proliferation of weapons
of mass destruction and missile delivery systems; to restrain the
development of destabilizing conventional military capabilities in
certain regions; to precent the transfer of arms and sensitive dual-use
items to terrorists; and to maintain United States advantages in
militarily critical technologies. This program operates effectively and
can vet a Chinese student in as few as 13 days. Non-students may take
longer, as many as 56 days. However, I can tell you based on my trip to
China two weeks ago that the American Embassy in Beijing and the
Consulate in Guanzhou are able to process and vet in about two weeks
visas for non-student travelers who fully and accurately outline the
purpose and itinerary of their trip. The government also operates a
``technology alert list'' to identify legal travelers from China that
may benefit from exposure to advanced U.S. technology with military
application.
Many provinces and municipalities in China now operate high
technology zones and ``incubator parks'' specifically designed to
attract back Chinese nationals who have studied or worked overseas in
critical high technology areas. When students or entrpreneurs return
with skills or knowledge that the central government deems critical
they are given free office space in the parks, loans, financial aid,
and administrative help in setting up a business designed to bring in
foreign investment and technology. Their companies are given tax
holidays. Innovative programs such as at Beijing's Zhongguancun High
Technology Park and Guangzhou's High Technology Economic and Trade Zone
get central government help. These are admirable programs that will
develop entrpreneurial skills among well-educated Chinese citizens.
However, as students and employees of U.S. companies return home, it is
important to know that they are not taking back American economic or
military secrets. Good counterintelligence and industrial security
programs are very important to U.S. security given this threat.
Mr. Chairman, the enforcement of intellectual property protection
laws in China is spotty and inconsistent at best. This is one of the
major complaints of American high technology companies about China's
compliance with its obligations under the World Trade Agreement. It
will certainly be a subject discussed by President Bush and Chinese
President Hu Jintao this week. The tendency to steal intellectual
property and high technology secrets in China is worsened when
ijntellectual property laws are not enforced there. And the problem is
further exacerbated when centralized Chinese government programs, such
as the ``863 Program'' I mentioned earlier in my testimony, are
specifically designed to acquire foreign high techology with military
application. This only creates a climate inside China that rewards
stealing secrets.
I believe that U.S. government security, intelligence and law
enforcement agencies must focus on the national security. They should
be looking for acts of espionage and for violations of the Arms Export
Control Act or the Export Administration Act. When it comes to
corporate or industrial espionage that is not a matter of national
security, I believe that the government owes American companies a good
legal infrastructure to protect trademarks, patents and copyrights; a
system of education on industrial security; and a strong effort to
ensure that China meets its own obligations to create a rule of law
that protects the right of ownership and intellectual property.
However, I do not believe that American intelligence or security
agencies should focus on forms of economic espionage that do not
involve national security information. From the standpoint of
Congressional action, my view is that the Congress should reconsider
the Export Administration Act with a view toward ensuring that its
provisions meet the needs of 21st century technology. The 1979 Export
Administrtion Act expired in 2001. The Senate passed a new Act in 2001,
but no revision passed the House. And the Executive Branch must
regularly review the Commodity Control List to ensure that appropriate
national security controls on exports do unduly restrict the ability of
American industry to compete in the world market. Generally,
technologies that are widely available on the world market and not
unique to the United States should not be unduly restricted unless they
can be subject to mulitlateral controls.
Finally, we cannot become paranoid and suspect that every traveler,
student and businessman from China is a spy or is out to steal
technology. Prudent law enforcement programs, counterintelligence
programs, security education and industrial securty programs are
important means to protect our nation.
Thank you for your invitation to testify today.
Mr. Hostettler. Mr. Anderson.
TESTIMONY OF MAYNARD ANDERSON, PRESIDENT, ARCADIA GROUP
WORLDWIDE, INC., AND FORMER DEPUTY UNDER SECRETARY OF DEFENSE
FOR SECURITY POLICY
Mr. Anderson. Thank you, Mr. Chairman. I too have submitted
a statement for the record. With your permission, I will
summarize.
Mr. Hostettler. Thank you.
Mr. Anderson. Thank you, sir.
We have proved that collectors representing foreign
adversaries and friends use espionage, theft and other illegal
means to take advantage of the United States and cause
unauthorized disclosure of protected information.
We also need to recognize that there are ethical failures
of trusted personnel who are prepared to traffic in information
and technology because they are greedy or because they are
susceptible to foreign pressure, and they are threats as well.
The United States is an open society and a prime target of
collectors because it produces more intellectual property than
any other nation in the world and does, to some extent, a poor
job of protecting it. World changes, producing new alliances
and new friendships internationally create more vulnerabilities
to our technology. America may have won the Cold War, but we
are losing ground economically to those who would pilfer our
commercial secrets.
National security and economic strength are indivisible,
and the real test in this world of military and economic
contests for supremacy may not be who first develops technology
but rather who is the first to use it effectively. Technology's
application is the key, particularly in an area of dual-use
technology.
Integration of the management, protection and use of
technology is an objective to ensure that we determine what
needs to be controlled, what can be controlled, and employment
of the most important control mechanisms. It is imperative that
we determine accurately whether any other nation wants our
technology and whether any other nation has it already, because
we can't afford to spend resources to protect things that don't
need protection. We need to balance the protection of real
secrets while maintaining the competitive position of American
industry in the world market.
It would seem prudent, therefore, to use all current legal
remedies available to enforce contracts and personnel actions,
to enhance enforcement opportunities against current Government
and contractor employees who break trust, to establish new
standards and requirements for our foreign visitors,
particularly students and researchers, and to ensure, probably
most of all, that our citizens know what is expected of them.
The easiest, least-expensive and most effective protection
technique is education. All custodians of protected information
should be subjected to continuing education concerning threats,
vulnerabilities and protection of information so that they
understand the consequences of its unauthorized disclosure,
which are obviously jobs, loss of profits and diminished
national security.
Everyone should be made aware that national security is
every citizen's responsibility.
Thank you, Mr. Chairman.
Mr. Hostettler. Thank you, Mr. Anderson.
[The prepared statement of Mr. Anderson follows:]
Prepared Statement of Maynard Anderson
Mr. Hostettler. Dr. Wulf.
STATEMENT OF DR. WILLIAM A. WULF, PRESIDENT, NATIONAL ACADEMY
OF ENGINEERING, THE NATIONAL ACADEMIES
Mr. Wulf. Thank you very much, Mr. Chairman, Members of the
Committee. I too, like my predecessors here, have a longer
statement, which I will submit for the record.
I am pleased to come to the hearing today to remind all the
Members of the Committee of the important contributions that
foreign-born scientists and engineers have made and continue to
make to this country. We are more prosperous and more secure in
large part because of them.
Before proceeding, while I don't perhaps have the same
credentials in intelligence that my predecessors on the panel
have had, I would note that both my wife and I have been
advisors to the Department of Defense for decades. We both
carry Top Secret SCI clearances and my wife served for 5 years
in the Pentagon as the Director of Research and Engineering,
where she had responsibility for the oversight of all R&D in
the Defense Department.
I am convinced that security, real security, comes from a
proper balance of keeping out those that would do us harm and
welcoming those that would do us good. Throughout the last
century, our greatest successes in creating both wealth and
military ascendancy have been due in large part to the fact
that we welcomed the best scientists and engineers from all
over the world. No other country did that, and nowhere else has
the genius for discovery and innovation flourished the way it
has here. I am deeply concerned that our policy reactions to 9/
11 have tipped the balance in a way that is not in the long-
term interest of our Nation's security.
Fifty years ago, our scientific leaders came from Europe.
There were the famous names like Einstein, Fermi and Teller,
without whom we would not have been the first to have the
atomic bomb; von Braun, without whom we would not be ascendant
in rockets and space; von Neumann, without whom we would not be
world leaders in computing and information technology.
Today, it isn't just Europeans that contribute to our
prosperity and security. The names are those like Praveen
Chaudhary, now Director of Brookhaven National Laboratory; C.N.
Yang, now Nobel Laureate from the Institute for Advanced Study
at Princeton; and Elias Zerhouni, who was born in Algeria and
is now the Director of the National Institutes of Health.
Between 1980 and 2000, the percentage of Ph.D. students and
scientists and engineers employed in the United States, who
were born abroad, increased from 24 to 37 percent. The current
percentage of Ph.D. physicists is about 35 percent; for
engineers, it is over 50 percent. One-fourth of the engineering
faculty at U.S. universities were born abroad; between 1990 and
2004, over one-third of the Nobel Prizes awarded to U.S.
citizens were to foreign-born scientists. One-third of all U.S.
Ph.D.'s in science and engineering are now awarded to foreign-
born graduate students.
We have been skimming the best and brightest minds from
around the globe and prospering because of it. We need these
new Americans even more now as other countries become more
technologically capable.
If I have one message to convey to this Committee today, it
is that it is a serious mistake to think that all important
defense technologies originate in the United States, and hence,
the problem is to keep our technology from being stolen by
others.
We talk proudly about the MIT ``Rad Lab'' that developed
radar during World War II, but the critical technology came
from the United Kingdom. At the end of World War II we were a
distant third in the development of jet engines behind both
Germany and Russia--the Soviet Union. The World Wide Web was
invented in Switzerland, not in the United States. I could go
on and on.
Many U.S. corporations are now shifting their development
to overseas locations, research and development to overseas
locations, not just because foreign labor is cheaper; that is a
common and comfortable myth. It is frequently because the
quality is better overseas.
Again, real security depends upon a very careful balance,
in this case, a balance of openness and secrecy. Walling
ourselves off from others, from the otherwise open exchange of
basic scientific information, is a recipe for being surprised
and disadvantaged.
To be sure, 9/11 and globalization have both changed the
balance point. The balance point for the Cold War was a
different one than for today. We need to fundamentally rethink
our policies. However, in my opinion, several recent policy
changes related to visas, to the treatment of international
visitors, to this new issue of deemed exports and so on have
had a chilling effect.
It has already been mentioned that the applications of
international students to attend U.S. colleges and universities
has declined. Scientists have chosen to hold conferences in
other countries. U.S. businesses have had to shift critical
meetings to locations outside our borders. In the meantime,
foreign companies, universities and governments are marketing
themselves as friendlier places to do business or to get an
education. In the race to attract top international talent, we
are losing ground.
At the same time, science and technology are growing
rapidly in other parts of the world. Over 70 percent of the
papers published by the American Physical Society's world
leading journal, The Physical Review, come from abroad--70
percent! We do not own all of the science and technology
information in the world. It is illustrated by a figure in my
written testimony, the number of first degrees in science and
engineering awarded per year in Asia is now almost three times
greater than in North America.
Permit me to turn to this issue of export controls for a
minute. They were instituted in 1949 to keep weapons technology
out of the hands of potential adversaries. In 1994, the
disclosure of information about a controlled technology to
certain foreign nationals even in the United States has been
``deemed'' to be an export of that technology itself. And
recent reports from the inspectors general of the U.S.
Department of Commerce and State have suggested that the
implementation of the rules governing deemed exports should be
tightened.
For example, they have suggested that the exemption for
basic research should be altered and possibly eliminated and
that the definition of access to controlled technology should
be broadened. The university community is rightly concerned
that a literal interpretation of the IG's suggestions would
essentially preclude foreign graduate students from
participating in research and would require an impossibly
complex system to enforce.
Given that over 55 percent of the Ph.D. students in
engineering in the United States are foreign born, the effect
could be catastrophic. Either universities would have to
exclude these students, or they would have to stop doing
research on potentially defense-related topics, which, of
course, includes most of the fastest-moving new technologies.
Neither of these alternatives strengthens the United States,
they weaken it.
One might ask if these policy changes will improve our
security, I would point out that the United States is not the
only research-capable country. China and India, for example,
have recognized the value of research universities to their
economic development and are investing heavily in them. By
putting up barriers to the exchange of information about basic
research, we wall ourselves off from the results in these
countries and slow our own progress. At the same time, the
information we are ``protecting'' is often readily available
from other sources.
And finally, in a country with an estimated 10 million
illegal aliens, one must wonder whether onerous visa policies
or demeaning practices at border crossings will deter the
committed trained spy or terrorist from entering the country.
The 2001 Hart-Rudman Commission, which in February of 2001
predicted a catastrophic terrorist attack on the United States,
and which then proposed the Department of Homeland Security,
said, and I quote, ``The inadequacies of our system of research
and education pose a greater threat to the United States
national security over the next quarter century than any
potential conventional war we might imagine.'' Their essential
point is that further damaging our system of research and
education, including its relation to foreign-born scholars, is
a very dangerous strategy.
The United States still benefits from educating and
employing a large fraction of the world's best scientists and
engineers. We have great research universities that remain
attractive to the world's best and brightest. We are envied for
our non-hierarchical tradition that allows young scientists
with new ideas to play leading roles in research.
We have progressed because we fostered a tradition of free
exchange of ideas and information and embraced a tradition of
welcoming talented people from elsewhere in the world. But that
advantage is eroding under current and proposed policies.
The international image of the United States was one of a
welcoming ``land of opportunity.'' We are in the process,
however, of destroying that image, and replacing it with one of
a xenophobic, hostile nation. We are in the process of making
it more likely that the world's best and brightest will take
their talents elsewhere. The policies that superficially appear
to make us more secure are, in fact, having precisely the
opposite effect.
Protecting Americans from threats must obviously be a high
priority. But as I said earlier, real security will be achieved
only by a proper balance of excluding those that would do us
harm and welcoming those that would do us good by a proper
balance of openness and secrecy. With selected, thoughtful
changes to U.S. policies, we can achieve both goals, making our
homeland safer and our economy stronger.
I would like to close with another quote from the Hart-
Rudman report, ``Second only to a weapon of mass destruction
detonated in an American city, we can think of nothing more
dangerous than a failure to manage properly science, technology
and education for the common good over the next quarter
century.''
Thank you for the opportunity to testify.
Mr. Hostettler. Thank you, Dr. Wulf.
[The prepared statement of Mr. Wulf follows:]
Prepared Statement of William A. Wulf
Mr. Hostettler. At this time we will turn to questions from
Members of the Subcommittee.
Ms. Van Cleave, about 30 percent of American university
science and engineering faculty are foreign born, according to
your testimony, 40 percent of Ph.D.'s in these fields go to
foreign students. You also say that foreign intelligence
services place senior scientists and exploit academic
activities.
Should there be better reporting of what projects these
individuals are involved in; and in the case of students, also
what subjects they are enrolled in, perhaps through an enhanced
SEVIS system.
Ms. Van Cleave. Mr. Chairman, it would be extremely helpful
to U.S. counterintelligence to have that kind of increased
reporting on these individuals.
Frankly, it is difficult to gainsay the statement that was
just made by my fellow panel member here, that what we want to
do is exclude those who would cause us harm and welcome those
that would do us good. The trick is figuring out which is
which.
Mr. Hostettler. It is possible that an individual from a
country of concern, if they are applying for a degree in music
education, for example, if they start taking nuclear
engineering courses as electives, that it would probably be
good to know that?
Ms. Van Cleave. It would be helpful to get the kind of
reporting of changes in emphasis where students coming for one
purpose then are switching their majors or emphasis to areas
that might have national security implications.
Mr. Hostettler. But they don't have to be major changes, I
mean, if an individual takes, through the course of a 4-year
degree, 10 classes in chemical engineering, that doesn't
necessarily meet the requirements of a minor in chemical
engineering, but it nonetheless will probably be very helpful
in their potential work.
Ms. Van Cleave. Yes.
Mr. Hostettler. Thank you.
Your testimony states that Chinese intelligence efforts
exploit our open economic system to reduce the U.S. military
advantage and undermine our economic competitiveness. It is
actually about the only foreign country you have mentioned by
name in your testimony. Knowing this, wouldn't you agree that
the Visas Mantis clearance needs better vetting by law
enforcement agencies, certainly as it relates to a Chinese
national coming to the U.S.?
Ms. Van Cleave. Yes, Mr. Chairman. I think that would be
very helpful. I appreciate the opportunity that we had in
closed session to discuss in more detail some of the reasons
why.
Mr. Hostettler. In your testimony, you state that the top
10 collectors probably accounted for 60 percent of foreign
collection at defense contractors last year. Could you tell us
what countries you are talking about when you talk about the
top 10, maybe in the order of their collection?
Ms. Van Cleave. Mr. Chairman, we did have the opportunity
to do that in closed session. I am reluctant to do that in open
session. However, I am able to tell you some of the reasons
why.
A number of the countries that are on so-called ``top 10''
lists, there is not unanimity across the community about what
countries really constitute the top 10. It depends on whether
you are looking at incident reports of information that might
be amalgamated by the defense security services, for example,
or some of the case loads that the FBI might be reporting; and
there is a different way of counting them, and so the top 10
may vary, depending on which source data we are looking at.
But let me give you another reason why I am reluctant to go
into certain specifics.
Ms. Van Cleave. Some of the Members some of the member
States that are among the top 10 as I believe I mentioned are
among some of our close allies, and there are many ways that we
deal with these kinds of incidents different from calling them
to the carpet in a public forum. There are different kinds of
approaches that we might make to allies in trying to forestall
this kind of activity. But the Committee can come to its own
conclusion and speculation. Those countries that do have
particular interests in military build up will themselves be
looking for those technologies that can help assist in that
military build up, and they will find in the United States a
very rich environment in which to acquire those kinds of
technologies. It is also the case that there is some measure of
economic competition that drives technology acquisition where
there is commercial advantage to be gained and a lot of money
to be made that is yet another incentive, and so we see a great
deal of activity to include many countries beyond just the top
10, but indeed at least a hundred nations. Nationals from a
hundred different nations were recorded just last year in
targeting U.S. technologies.
Mr. Hostettler. Ms. Van Cleave, I appreciate the point that
you made with regard to our friends. Actually, in your oral
testimony you did mention two of those nations, China and
Russia. Our largest--well, I should say one of our largest
trading partners--we have ongoing evolving relations with
Russia. The reason why I asked the question is the exact reason
you gave why you say you are reluctant to give us that, and
that is, there is an assumption among many of our constituents,
many of our citizens of the United States that our friends
don't spy against us. But as you mentioned, in general, that is
a very erroneous assumption to be made. And the reason why I
asked you that question is to put on the record very
specifically who those people are because, once again, it's
important for us to know that, for example, through the Visa
Waiver Program, and through other programs that don't take
advantage of the Visa Mantis system, that there may be
requirements for us to change the law with regard to our
friends. And I mean, I don't mean that with quotation marks. I
mean friends but that have reasons that may be confusing to a
lot of us and would be very confusing to a lot of my
constituents as to why they aggressively commit espionage
against the United States. And so I will not press you on the
issue, but I will simply, once again, reiterate that it's
important for us to, in open session, if it is not classified,
to divulge this information really for the benefit of this
Committee and the benefit of our constituents.
Dr. Wortzel, your testimony states that tens of thousands
of student visas were given to Chinese nationals last year; in
fact, one of the highest. Do you believe we're giving
preference to China in these student visa numbers over our
allies, over some of our allies?
Mr. Wortzel. I don't think it's a definite preference
toward China. I think what you're seeing, first of all, 1.3
billion people there, there's going to be more students trying
to get out. We're obviously a very attractive place to get an
education, whether it's a high technology education or an
education out in the social sciences. I think our programs are
actually pretty restrictive. It's difficult to go into an
American Embassy and get into the United States if you're in
China. So I think we have to deal with the fact that there are
just huge numbers of people there. India, only second to that,
and that probably accounts for the numbers.
Mr. Hostettler. Do you believe an enhanced SEVIS system
would allow us to gain better information to provide our
intelligence community the information they need to----
Mr. Wortzel. I do. I'm a great advocate of data mining. I
think that the ability to electronically sort through what is
open-source data, who's here, what are they doing, whether
that's by someone in immigration--they've got a right to know
what somebody's doing at a university. Now, one can argue that
a U.S. intelligence service getting that information might be
objectionable to a university president. But if the immigration
service gave somebody a visa, I think it'd be great to allow
them, allow Customs to get in, or Immigration, I'm sorry, to
get in and say, okay, we gave Joe Doe a visa, and he said he
was coming here to study this. Let me see what he's studying.
And those are things that can be done quickly, electronically,
and things can be sorted out. I do think we should be
approaching it that way, and I think that we have appropriate
agencies in the Government that could look at that, and then if
there's a reason to raise concerns about what's going on, they
turn it over to another agency or counter-intelligence agency.
Mr. Hostettler. Very good. Without objection, I will grant
the Chair an additional minute to ask one additional question
of Dr. Wulf, maybe a couple of questions actually. Very short
answers. You might not have the information. Dr. Wulf, could
you tell me, given the fact that Master's and Ph.D. slots for
engineering are limited in the United States, would you have
statistics that tell us the number of American citizens who are
denied Master's applications, who have Master's applications
denied, as well as Ph.D. applications denied in the United
States? Would you happen to have those?
Mr. Wulf. Approximately zero.
Mr. Hostettler. So it's really unlimited--the number of
Master's and Ph.D. slots?
Mr. Wulf. I didn't quite say that. But the number of
Americans who do not enter graduate programs because there's no
space is essentially zero.
Mr. Hostettler. Okay.
Mr. Wulf. The trouble is they're not applying.
Mr. Hostettler. So there are zero denied.
Mr. Wulf. Yeah. Approximately zero. I mean, there may be
some oddball cases I don't know about.
Mr. Hostettler. Thank you very much.
The Chair recognizes the gentlewoman from Texas, Ms.
Jackson Lee.
Ms. Jackson Lee. Thank you very much, Mr. Chairman. Your
initial round of questioning certainly points to a dilemma
which we face. I'd like to take some remarks that were made
generally speaking through the testimony presented in the open
session to indicate my agreement. Let me first of all thank
Congresswoman Lofgren for recognizing Dr. Wulf and the
astuteness in which she recognized you in as much as you are
representing or certainly associated with the University of
Virginia, and I couldn't think of a better school. I happen to
be an alumnus. So I thank the Congresswoman very much for her
astuteness, Dr. Wulf, and I thank you for your service, as well
as I do the other panel members.
But you did highlight for us the fact that we do prosper
because we skim the best scientists from around the world. At
the same time, I think interwoven into your remarks is the idea
that we suffer as well from enticing students and graduate
students into the sciences and other high technologies that are
necessary. So I'm going to come to you and pose that question.
But I do want to go to Ms. Van Cleave to ask, what is the
extent that she feels that we are now able, the United States,
your industry--your, in terms of counter intelligence--able to
identify, right now, foreign nationals who are coming into the
United States to engage in espionage? Do we have that capacity?
Ms. Van Cleave. We have limited insight into the foreign
intelligence operations into the United States, which is to
say, to the extent that we understand the character, make-up
and operations of foreign intelligence services of concern, we
can identify individuals that might be sent here for those
particular purposes. However, much of the intelligence
collection against the U.S. technology base is carried out not
by known intelligence officers but rather by those who are
employing nontraditional collection means against us. And that
is a much much more difficult problem.
There I would have to say that we have precious little
understanding or way of knowing when individuals who ostensibly
are coming here for legitimate business purposes might, in
fact, have more troubling objectives in mind.
Ms. Jackson Lee. So, in essence, part of the road map that
you're providing for us today is the heaping up, if you will,
of resources to look at that component that would be
nontraditional in the way that they would seek to secure
information. That seems to be where we need some emphasis.
Ms. Van Cleave. Yes. We're very much in need of tools that
would enable us to be able to characterize who those people are
and why they are here, that small slice that is here for
illegitimate purposes.
Ms. Jackson Lee. I thank you.
Dr. Wortzel, I likewise had some agreement with some of the
remarks that you have made. But let me just say, and I believe
that we will wind up on the same page. We know that, as I
started out by saying, the importance of the intellectual
exchange and the benefits that the United States has gained by
a vast number of individuals. And we also know, without any
naming or, if you will, illuminating any closed sessions, we
know that even our allies have been found to be engaged in some
activities that we would not support. So I don't want this to
be a hearing that stigmatizes the entire student body from
China. They our allies and friends. We have engaged in some
very positive exchange opportunities, both in terms of our
student exchange but also our trade exchange. And frankly, we
are working toward a diplomatic relationship in terms of their
continuing improvement. And I might add, we certainly want to
ensure that our military operations are more in sync than in
conflict. But you did mention, and I was trying to find your
quote, but let me just say this: I look at it that the overall
war on terrorism has taken us away from--and don't want to
suggest that we should diminish that effort, but we need to
increase, if you will, the resources for the rest of the
intelligence community. Why don't you comment on where we need
to, if you will, lift that issue up? And in the meantime, I'll
be finding one of the quotes that I agree with you on. And I
guess it is the point that you made about our work should be--
that ties into my question--national security, versus the
question that many Members--rightly so, because their
constituents are impacted by this whole economic issue. If you
go to China, you're inevitably talking about CDs and country
western music and other music that they have obviously
utilized. But that's economic. And I think you said something
about, we should be focusing on national security. Can you
share that with me?
Mr. Wortzel. Well, I think we should--thank you,
Congresswoman. We should focus on national security. We need to
provide, as I said in the testimony, the legal structure here
in the United States, and we need to foster a legal structure
in China that will provide for property rights and intellectual
property rights. But we need to worry about national security
here. And I think that's the critical task. Refining the lists
of controlled commodities, dual-use items, to ensure that we
protect what is really unique to the United States. I mean,
there are some things we're just way ahead on that nobody else
is doing, composites that make stealth technologies, turbine
and in jet engine technology. Nobody else does this. We need to
think about that. I would argue generally that basic research
in universities has got to be open, wide open, but that when
the Department of Defense or the Department of Energy goes to a
specific university and funds a program that moves into applied
research, then we should be able to know who's working on it
and what they're working on and why they're there. So I
wouldn't worry, Mr. Chairman, about somebody taking 10 courses
in chemistry, advanced chemistry. But if he or she is working
to do research on an applied technology with military
application or with application for weapons, I'd get really
nervous about it. And I would want to be able to know that.
Ms. Jackson Lee. Mr. Chairman, Dr. Wulf, if he might
respond to the question I raised. Dr. Wulf, that was the
question dealing with--I started out the whole question dealing
with the importance of the talent that comes here to the United
States and the lack of U.S. Citizens engaged in the sciences.
Mr. Hostettler. No objection. The gentleman will be allowed
to respond.
Ms. Jackson Lee. I thank the Chairman, and I'll conclude
with that.
Mr. Wulf. As I said in my oral testimony, and it appears
again in my written testimony, foreign-born nationals represent
an enormous fraction of the science and engineering talent in
this country. I tried to give some examples. The fact that
somewhere between 25 and 30 percent of the faculty in
engineering schools are foreign-born, the fact that overall,
something like 37 percent of all of the engineers and
scientists in the United States are foreign-born, the fact that
a third of the Nobel Prizes awarded in the last 10 or 15 years
to U.S. Citizens were to foreign-born. It's just really hard to
overstate the benefits that we have reaped by skimming off the
best and brightest minds from around the world. And we are, in
my opinion, in serious danger of creating an atmosphere that
those people will not want to put up with.
Ms. Van Cleave made reference to the fact that, in the
fifties, a number of Chinese returned to mainland China and set
up their missile program. I would recommend to any Member of
the Committee that feels like exploring that, that they take a
look at a book called, The Thread of the Silk Worm, about the
man who headed the Chinese missile program, named Tsien Hsue-
shen. He was a professor at Cal Tech, got his Ph.D. at MIT, was
one of the leading rocket scientists, literally, in the United
States, and quite improperly and erroneously, got caught up in
the McCarthy hearings, was held in house arrest for, if I
remember correctly, 2 years and, finally, in disgust returned
to China and created the Chinese missile program. Yes, it was a
returned Chinese. But we drove him there.
Mr. Hostettler. Will the gentleman concede the fact that it
was the Communist Chinese missile program?
Mr. Wulf. Oh, yes. Absolutely.
Mr. Hostettler. The Chair now recognizes, without
objection, the gentleman from Texas for questions, 5 minutes.
Mr. Gohmert. Thank you. Appreciate my colleague allowing me
to proceed.
I'm going to ask each of you to name the top two
immigration practices or omissions that you believe are the
biggest threat to our national security. But while you're
thinking about that, I want to ask Ms. Van Cleave, are you
familiar with the diversity visa program where we provide
50,000 visas a year on the basis of a lottery? Are you familiar
with that program?
Ms. Van Cleave. Congressman, I have to say, no, I'm not.
Mr. Gohmert. Okay. Well, then I don't guess you can tell me
how many terrorists may have utilized that program. But anyway,
I would suggest that you take a look at it. Some of us, we
voted that out of this Subcommittee, a repeal of that, because
it seemed ludicrous to some of us that we be awarding visas on
the basis of a lottery, allowing immigration to abdicate their
responsibilities. That's a concern of some of ours. But let me
start with Dr. Wulf and work our way down to my left. Doctor,
what do you see as the two biggest, two immigration practices
or omissions that are the biggest threat to our national
security?
Mr. Wulf. Two? That's not easy. But the first one I would
name is the fact that immigration visas are not awarded
particularly on the basis of the contribution which the
individual will make to the country. They are more typically
family based or that sort of thing. I think we ought to give
special consideration to those people who can really contribute
to the country. And I have to say, the second one is
overreaction. I really am concerned that we're in the process
of making things worse rather than better by overreacting.
Mr. Gohmert. Thank you.
Mr. Anderson.
Mr. Anderson. Yes, sir. I think perhaps the most important
one to me is that we don't know who is arriving here. We do a
lot of sort of superficial work, but we're rather poor in
determining just exactly who's coming. And I don't mean to--I
don't mean for that to sound discriminatory. But we don't ask
those folks, for example, students and researchers coming in,
we don't ask those folks to provide us with a great deal of
information about who they really are. We ask it of our own
students. We ask it of our own military personnel. We ask it of
all kinds of people in the United States, but immigrants really
are not subjected to very strenuous questions on who they are
really. And I think that may be, to my mind, the greatest one.
I'm not sure that--I'm not sure that I could name a second one.
I don't like quotas. I don't think quotas are good. I don't
know that that's a--I don't know that that's a threat to us.
But I think a failure to really identify our immigrants is a
major issue.
Mr. Gohmert. Okay. Thank you.
Ms. Van Cleave.
Ms. Van Cleave. From the perspective of counter
intelligence, immigration laws are very clear: where we have an
individual who may be known or expected to engage in
intelligence activities and activities inconsistent with U.S.
laws, visas are denied. But my real concern about immigration
laws is that, from a CI perspective, they really can't do a
great deal for us beyond that. I mean, there isn't a panacea
that enables or immigration laws to protect us against all of
the things that this hearing has now convened to discuss. I
would have to say that getting at the real question of who
these people are who are coming into the United States,
immigration laws can do, can provide some of that information
to us. But that really is the point where I think that we need
to have a layered approach of which immigration controls are
only one part. The matter that was mentioned a little earlier
by the Chairman----
Mr. Gohmert. Can you help me? Maybe my mind's eye is too
simplistic. I'm just asking you, what do you see as the biggest
threat to national security? And from a counter intelligence--
you're saying we need a layered approach.
Ms. Van Cleave. Because, sir, I know----
Mr. Gohmert. So the biggest threat in your mind is that we
don't have a layered approach?
Ms. Van Cleave. I know that foreign intelligence services
and foreign governments will exploit such loopholes as they can
find to send personnel here to achieve certain ends.
Mr. Gohmert. Bingo. That's what I'm looking for. What
loopholes do you know of that we can fix? Number one problem.
Number two problem.
Ms. Van Cleave. And I believe in closed session I was asked
to take, for the record, that particular question and to
provide a detailed answer back to the Members of the Committee.
But in open session, let me say that I am concerned that, where
there is an opportunity that immigration laws present for
foreign nationals to enter here because they present themselves
as residents of another country, and we really don't get true
disclosure on who they are and where they really come from,
then that is one particular type of a loophole that I think
that this Committee may want to consider closing as it is
reviewing our immigration laws.
Mr. Gohmert. So we don't get sufficient information on
where this individual is actually coming from. Is that correct?
Ms. Van Cleave. In certain instances, that is correct.
Mr. Gohmert. Number one. I wasn't asking anything
classified. Just a succinct, what do you say, number one
problem, number two problem, and then we can go to work from
there. We can get classified information. We can go beyond. But
okay, so that's the number one problem. Sufficient information
on where they're from. What else?
Ms. Van Cleave. With respect to other aspects of our
immigration laws, I have to tell you, if it isn't obvious
already, that I am not an expert in U.S. immigration laws.
Mr. Gohmert. You're hopefully an expert on counter
terrorism or counter intelligence.
Ms. Van Cleave. Yes, sir. That's correct. That is correct.
And being able to avail ourselves of different kinds of
databases and information insights on persons who are coming
into the United States in various categories of immigration
visas is very valuable to U.S. intelligence. And to the extent
that we can have more robust databases on persons who are
coming here and what they do while they are here, it is of help
to us very much.
Mr. Gohmert. And I apologize to you if you felt like I was
trying to make you into an expert on immigration. And I
apologize if I presumed too much in thinking that someone in
counter intelligence might overlap or bump into areas of
immigration policy where a light would go off and you say, oh,
that's bad for our country that we have this policy. It bumps
up against everything we know to be true and good as counter
intelligence. Some of us may individually be counter
intelligent. But anyway, Dr. Wortzel, if you would, very
quickly. My time is up.
Mr. Wortzel. I think that the Technology Alert List and the
Visa Mantis program as a process is a good idea. I think it can
be improved by education for the officers that actually stand
the visa line. And my own experience in embassies is that, when
you have an ambassador that insists on interdepartmental
cooperation and screening of visa applications, you end up with
better educated selections of who's getting a visa and who's
getting denied. So I would improve that. It's something I think
we're doing well. I think one of the greatest threats is that
when we make it too difficult for an American company to bring
in an intra-company transfer, either to do work in the United
States, or for a corporate education program, we force that
company to export its entire R&D effort to a third country or
to China, a place like China. So I think we have to be very
careful about this balance of what I just advocated in Visa
Mantis and Technology Alert Lists and ensuring that when a
company has a legitimate need for some foreign expert to come
in here and get educated or do research and go home and manage
or to work here, we don't force that company to export our R&D
capability outside of United States.
Now, Mr. Chairman, I failed to respond to one part of Ms.
Jackson Lee's question. And if you would indulge me, I could do
that in a minute.
Mr. Hostettler. Without objection.
Mr. Wortzel. Certainly. She asked about the balance between
counter intelligence responsibilities and antiterrorism
investigative responsibilities for the FBI. And let me say that
my experience before and after September 11, 2001, in having to
deal with FBI agents here in this country that you know I may
have spoken to or may come to interview me is they're doing a
pretty good job. I mean, these--they are able, despite the fact
that they're out hunting terrorists and hunting people that are
perhaps dealing in weapons of mass destruction, they're still
able to focus on the big ball park issues that deal with what
may be Chinese espionage, so that their people can use more
reinforcement. I think they need more counter intelligence
agents in the field. They can use more education. I find myself
talking to FBI counter intelligence agents that don't know the
history of espionage with China, and you know I'm going back
over the fact that I'm a little older, and I've been part of
it. But basically, I'm pretty happy with what they're doing as
an agency, and I support the changes in the creation of a new
division.
Mr. Hostettler. Thank you.
The Chair recognizes the gentlewoman from California for 5
minutes, Ms. Lofgren.
Ms. Lofgren. Thank you, Mr. Chairman.
I want to focus a little bit on the Visa Mantis process
because it is bulky and it is slow and it's causing us
problems. And I'd ask unanimous consent to enter into the
record an article from the New York Times this August that
talks about a Ms. Wang, who is a cryptographer, mathematician
actually, who was one of nine invitees to a conference on
cryptography that was going to help the United States because
they found a flaw, and they were going to help us. And they
were not able actually to get in to provide that help.
Mr. Hostettler. No objection.
Ms. Lofgren. I'll just note also, last spring, I met with,
I won't mention his name but a Nobel Prize winner in
California, who told me that he will no longer organize
scientific conferences in the United States because you can't
get the scientists in. And so I've actually, since he said that
I've been looking at all the high energy physics, it's all,
it's in Toronto, it's in Europe. They're not here anymore. And
so we're going to pay a price for that. The Visa Mantis,
stepping back, I think someone said we need to take a look at
our export control system. And I do--we've tried to do that. We
lost a vote on the floor here. Secretary of State Rice suggests
we ditch the MTOP standard--it doesn't work--and to go with a
standard of what's readily available, which makes a lot of
sense to many of us. If we were to do that, here's the
question: Wouldn't that help on the Visa Mantis project?
Because then you would have a much limited set of technologies,
and you would be protecting it against the things you really
needed to protect, instead of this broad area of when you go to
Fry's Electronics and buy it, and if you can buy it at Fry's,
it's too late. And then, wouldn't that also help on the deemed
export problem? Because right now, we are controlling on things
that--I mean these students are just going to go and get the
same thing at Oxford, or you know, it's not as if we're the
only people that are studying this. What is your reaction on
that approach as part of the way to fix the Visa Mantis
problem?
Mr. Wortzel. First of all, on MTOPS, I would drop that,
too. I think it's kind of silly to begin control and speed--I
think you have to begin to figure out if there are certain
software applications that have great military or cryptographic
application that you control. And I think it's getting silly to
control MTOPS, and I think it's getting silly to control chip
fencing, whether it's five or 13 microns or whatever. Now, all
these questions that you're asking really also come down to
questions on deemed exports. And well, let me give you an
example. You can study this stuff. I'm a political scientist.
I'm a military officer. You know, I have done a little bit of
intelligence work here and there. I'm not an engineer, and I
never worked in production. And frankly, most consular officers
on a visa line have not either.
Ms. Lofgren. They don't know.
Mr. Wortzel. They don't know. So their education is a very
important part of it. And here, if you're working in an
embassy, if you have got a good ambassador or consul general
he's putting those people in touch with the industry people.
Ms. Lofgren. Let me just--I know I'm going to run out of
time. I don't want to be rude. But right now, we have the
responsibility; the State Department with Commerce does this
whole list. Just simply by shrinking the list we would help the
situation to target, it seems. Would you agree Dr. Wulf?
Mr. Wulf. As long as you shrink it by making it more
specific. Part of the real problem is here it's a long list or
its two long lists, and each item on the list is quite generic.
So you hand this to some poor consular official who doesn't
have a technical background, and they----
Ms. Lofgren. Yes it is always easier to say no. You don't
get called to account for saying no. Only for saying yes.
Mr. Wulf. Right.
Ms. Lofgren. The other thing I had, looking at it, the
slowest part of the whole Visa Mantis program is the FBI. They
don't have a deadline. And I've often wondered, how much do
they really have to do? I mean, these are foreign nationals.
They haven't in most cases been to the U.S.; they're not
permanent residents. They don't live here. You know, maybe the
CIA might have something on them, in which case we should get
that information. But they're not going to be on a rap sheet in
the FBI's computer. I mean, it just seems to me that if you're
paying a price by having the top scientists go to other
countries, having your scientific conferences be shoved abroad,
or I'll tell you, as I was driving to the airport in
California, I heard an interview of one of my constituents who
had a huge telephone network system that he had sold to a
company abroad. He couldn't get his customer in to teach them
how to use the system, so he relocated his company to Vancouver
and left California. So there's a price to be paid on all of
this. What are we getting for it in terms of security?
Mr. Wortzel. Well, first of all, I don't think it's wrong
to ask universities and companies to plan ahead and figure out
who they're going to invite. So a few months advance notice,
you know, if you decide tomorrow morning you're going to run a
conference and you want somebody----
Ms. Lofgren. Right. No. I don't disagree with that.
Mr. Wortzel. With respect to--I wouldn't eliminate any part
of our intelligence or law enforcement community. But I do
think that of all the agencies, from what I have seen and read
and experienced, that's the one that can profit the most by a
systematic automation of the records.
Ms. Lofgren. Well, it's paper records, and that's why it
takes so long. I mean, it's pretty shocking that they've still
got paper.
Mr. Wortzel. So I wouldn't eliminate it. Instead, I mean,
you have oversight. That's where I would push for.
Ms. Lofgren. We've yet to have a hearing on oversight of
the FBI in the Full Committee in the 10 years I've been on the
Judiciary Committee. I would just close. I know my time is up.
We talked about our competitiveness. But if 2 percent of the
population of China is really, really smart, that's more than
the entire population of the United States. So that's what
we're competing against, and we'd better make sure that we've
got new Americans to do that. And I yield back.
Mr. Hostettler. I thank the gentlewoman. The Chair
recognize the gentleman from Iowa, Mr. King, for 5 minutes.
Mr. King. Thank you, Mr. Chairman.
I regret that I had to step out of this hearing for a
period of time, and I missed some of the core of the testimony
of the witnesses. I thank you all for your testimony and your
written testimony. I have absorbed some of this testimony when
the doors were closed and some of it when it's open. And I look
back at the United States of America in 1959, and I remember
sitting in the sixth grade when Sputnik went up into space. I
didn't know at that day, but I found out over the years that I
had been assigned to, and millions of American students had
been assigned to, go down the path of science and technology
and engineering and math and chemistry. And it was, we did an
all out full court press. We mobilized America to educate our
young people so that we could prevail in the race to space, and
in the process of doing so, we also, I believe, laid the
groundwork to prevail in the Cold War by succeeding
economically where the Soviet Union was bankrupted and before
they checkmated us militarily, by the way. And that backdrop of
the history of what we did in this country to mobilize a nation
of essentially U.S. citizen students that went into the science
and technology was the pattern that we had in the past. And I
would ask, to what level we have a truly, an intellectual
exchange when we have, I think, far more students here in the
United States studying science and technology than are studying
in foreign countries? Is it an exchange, or is it just a
transfer of our science and technology to foreign countries?
And then, so then I began to think in terms of what's ahead of
the next generation of America if we're watching these numbers
grow. And as Dr. Wulf has testified, 25 to 30 percent of the
engineering faculty is foreign-born; 37 percent of the
engineering degrees are foreign-born; one third of the Nobel
prizes are foreign-born. If that number is growing, and I
suspect it may be, because more than 50 percent of the
engineering doctorates are foreign-born. So are we, do we have
an intellectual transfer here, or are we just slowly
transferring our intellectual property and our human property
to foreign countries? A generation from now, are they going to
need our universities to teach this, or are they going to have
then established in place an ability to teach that engineering?
Are we going to send our students there at some point? At what
point do we reach that critical mass, that tipping point where
they're not coming to the United States, not because we haven't
set a climate that says, please come here and learn, but
because they have now absorbed the science and technology
necessary for them to be the world leaders? And if we're
looking at a nation like China, for example, that has 1.3
billion people and the ability to mobilize all of them if they
choose or skim the cream off of the crop, get that education,
bring them back home again, have we already marketed some of
America's future? And what if--and so within the context of
that, that generational, what happens in 25 years or 30 or 50
years? I inject another question. And that is, are the Israelis
educating Palestinians or Arabs in military or nuclear
technology or missile technology? Do they have an exchange
program going on with their neighbors, their people that are
sworn to kill them and drive them into the sea? I mean, that's
a little microcosm possibly of this, I'll say, the risk of an
impending crisis with China and a generation from now. So if
the Israelis see the wisdom in not doing that with their
neighbors sworn to their annihilation--and I remember the
Chinese general that threatened to nuke Los Angeles. And I wish
Mr. Gohmert were here, because he had a conversation with their
leadership over there last month to point that out. I pose then
my question to Mr. Wortzel. Are we thinking generationally in
this? And what would happen to the future of this country if we
decided that we didn't want to take a security risk or
intellectual property risk and wanted to mobilize the young
people in this country like we did after Sputnik?
Mr. Wortzel. Well, I would like very much to see
scholarships targeted toward American students rather than
bringing foreign students into American universities.
Particularly when you're dealing with a country that has 790
something--or $43 billion in foreign reserves. They can afford
to send their own students to American universities. But
frankly, I would not keep them out. We do not know the ultimate
result of our engagement policy with the People's Republic of
China. It is a latent security threat, and it is certainly a
real threat in the sense of its strategic nuclear forces
programs not so much in its conventional forces. But I will
tell you that there's great change there. The economic freedom
is opening up. It hasn't resulted in a change in political
freedom. You find the average, the average Chinese citizen in
most urban areas, and now that's the majority of them, owns an
apartment. They have a mortgage. You know, I mean, it's
changing. So we don't know what the outcome will be. I think
what we need to do, again, is to identify the most critical
technologies and military systems--well, not military systems--
but military, dual-use technologies where the United States is
so clearly ahead and ensure we protect them. But we should not
be protectionist about keeping Chinese citizens out of this
country or out of our universities.
Mr. King. Thank you.
Dr. Wulf.
Mr. Wulf. I think we all should put emphasis on how we get
more U.S. students to study math and science. Just as you
pointed out, post-Sputnik, it became a national priority, and
by George, a whole bunch of people from my generation took math
and science, became engineers and scientists. And we're living
off of them now. The trouble seems to me, is that science and
technology is not particularly a priority in this country right
now. I just got a letter to make a nomination for the
Millennium Prize. This is a million euro prize that's put up by
the Finns. Now if I remember correctly, there are 4 million
Finns. So it's kind of a third of New York City. And they put
up a yearly million euro prize. We haven't awarded the National
Medals in Science and Technology for the last 3 years. We've
named them, but they haven't been awarded. It's not been enough
of a priority for the President to do that. We have our funding
for physical science and mathematics, engineering research has
been flat or declining for 2 decades. Total research budget is
going up, but it's all going into the life sciences--I just
read this--as our society as a whole doesn't believe that is a
priority. And boy that's communicated to the young kids, and
they don't see that they should be doing all that hard work
when there's no reward for it.
Mr. King. Thank you.
Thank you, Mr. Chairman. I yield back.
Mr. Hostettler. I thank the Chairman.
Ms. Jackson Lee. Mr. Chairman, would you yield for just a
moment?
Mr. Hostettler. Yes, I yield to the gentlelady.
Ms. Jackson Lee. Dr. Wulf posed this question before, and I
won't ask you to repeat it. I'll just make this statement
because I heard your answer to Congressman King's comments.
This is not the Science Committee. Both Congresswoman Lofgren
and myself are Members of the Science Committee. And I would
simply say that the dearth and the problem is even wider than
you might have expressed here. There has to be a parallel
effort in order to surpass or to overcome the dilemma that
we're in. National security, more resources in intelligence,
but over here, a ramping up of the training of Americans in the
sciences and the mathematics and the encouragement of grad
students and professors and researchers and more dollars in
basic research. Thank you.
Mr. Hostettler. The Chair feels compelled to make an
addition to the record given my background. Being an
engineering student in the late seventies and early eighties, I
can't remember a single Federal Government program that
encouraged me to become an engineer. I do remember the
influence of family and community and of the economy and the
fact that I was encouraged to follow my desire to study that
which I enjoy which is math and physical sciences. It just so
happened that my graduation also coincided with one of the
largest build-ups of the United States military where there was
a huge demand for the applied sciences. And the fact that I
also graduated at a time when the nuclear industry was, had
gained ground. But as a result of a very limited number of
unfortunate incidents in that industry, caused that industry to
almost evaporate from future growth. Virtually all of my
encouragement came not from the Federal Government, but came
from a robust economy and a strong understanding of the strong
national defense, which all of those needed engineers, and
there was a tremendous demand for that. I think if we see a, I
think we can--it's inversely proportional to the level of
attendance that's been taken on by the Federal Government.
Since I have been in Congress, as an engineer, I've heard
continually about this, about the fact that we're spending more
in the Federal Government on attention to science and
engineering and that we are getting fewer American scientists
and engineers. It made, once again--this is not, to reiterate,
this is not the Science Committee. But this is a Committee that
is going to look into in the coming months the issue, one of
the issues that was touched on briefly here, and that is how
we--what is the relationship between foreign-born, foreign
nationals and our institutes of higher learning with regard to
engineering and science and why people aren't doing what they
did in the late 1970's, and that is going into engineering in
fairly large numbers. If I remember, the fact that there were a
few people that were kept out of the programs because of
restrictions on attendance at that time. So I just make that
addition simply out of experience.
And I appreciate the input of all the members of the panel.
Your testimony has been highly effective and highly beneficial
to this discussion. All Members will be allowed 2 days to make
additions to the record. The business before the Subcommittee
being complete, we are adjourned.
[Whereupon, at 4:11 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Map on the ``Number of Patent Applications and Foreign Students Per
County,'' submitted by the Honorable John Hostettler, a Representative
in Congress from the State of Indiana, and Chairman, Subcommittee on
Immigration, Border Security, and Claims
Prepared Statement of the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Ranking Member,
Subcommittee on Immigration, Border Security, and Claims
The subject of this hearing is, ``Foreign Nationals Engaged in
Economic and Military Espionage.'' According to the National
Counterintelligence Executive Office's report to Congress this year,
individuals from almost 100 countries attempted to acquire sensitive
United States technologies in FY2004. The report concludes that foreign
access to sensitive information with both military and commercial
applications has eroded the United States military advantage, degraded
the U.S. Intelligence Community's ability to provide information to
policymakers, and undercut U.S. industry.
The report states that we are vulnerable to such espionage because
the openness of the United States has provided foreign entities with
easy access to sophisticated American technologies. New electronic
devices have vastly simplified the illegal retrieval, storage, and
transportation of massive amounts of information, including trade
secrets and proprietary data. Globalization has mixed foreign and
American companies in ways that have made it difficult to protect the
technologies these firms develop or acquire, particularly when that
technology is required for overseas operations. Lastly, sophisticated
information systems that create, store, and transmit sensitive
information have become increasingly vulnerable to cyber attacks.
Apparently, the Counterintelligence (CI) Community is uncertain
about exactly how much of the intelligence collection effort is
directed by foreign governments and how much is carried out by private
businessmen, academics, or scientists for purely commercial or
scientific purposes. It is clear, however, that some foreign
governments do employ state actors. This includes their intelligence
services as well as commercial enterprises. Most of the foreign
governments that are attempting to acquire American technology employ
tools and techniques which are easy to use, inexpensive, low risk, and
sometimes legal. In most cases, foreign collectors simply ask for the
information via e-mail, a phone call, a FAX, a letter, or in person.
The report asserts further that increased demand for foreign labor
in United States high-tech industries and the sharp rise in foreign
investment in the United States over the past decade have given foreign
governments increased access to American businesses and, consequently,
to U.S. trade secrets. In addition, recognizing the mutual benefits of
an unhindered exchange of information, the United States opens its
military bases, national laboratories, and private defense suppliers to
foreign visitors. There were more than 14,000 requested visits to
official U.S. facilities in FY2004. Although facilities hosting foreign
visitors generally employ security measures to minimize the loss of
trade secrets and sensitive technologies during these visits, the CI
Community continues to see reports of losses.
These are real concerns. Nevertheless, the visits from foreign
nationals are valuable to American companies and the United States
government. Also, many American industries need highly educated
professionals from other countries. The employment of such foreign
professionals has increased American productivity and resulted in more
jobs for American workers. In the science-oriented sectors, for
instance, employers often need a professional with cutting edge skills
and unique expertise and find that qualified American workers are not
always available to fill these positions. In other fields, such as
education, shortages exist in specific areas of the country and
positions continue to go unfilled.
Foreign students represent half of all United States graduate
enrollments in engineering, mathematics, and computer science. We do
not have enough United States students graduating with advanced degrees
to fill the highly specialized positions and, according to the Bureau
of Labor Statistics, the demand for these graduates will increase.
Foreign countries, such as Germany, have updated their immigration
laws to attract highly educated talent. If our immigration laws do not
allow these professionals with cutting edge knowledge to remain in the
United States, they will go to work for our competitors and additional
jobs that could have remained in the U.S. will follow them abroad. The
result will be American jobs lost and American projects losing out to
foreign competition.
Thank you.
New York Times Article submitted by the Honorable Zoe Lofgren, a
Representative in Congress from the State of California
THE NATIONAL COUNTERINTELLIGENCE STRATEGY OF THE UNITED STATES,
SUBMITTED BY THE HONORABLE MICHELLE VAN CLEAVE, NATIONAL
COUNTERINTELLIGENCE EXECUTIVE, OFFICE OF THE DIRECTOR OF NATIONAL
INTELLIGENCE
Revised Prepared Statement of Dr. Larry M. Wortzel, Visiting Fellow,
The Heritage Foundation
Mr. Chairman, Members of the Committee,
Thank you for the opportunity to testify today on the theft of
national security sensitive technology in the United States. As a
former military intelligence officer who has tracked the activities of
the People's Liberation Army and Chinese intelligence services for 35
years, I know of no more pervasive and active intelligence threat to
America's national security than that posed by the People's Republic of
China. The work force available to the Chinese government and its
corporations to devote to gathering information in the United States is
nearly limitless. There are some 700,000 visitors to the United States
from China each year, including 135,000 students. It is impossible to
know if these people are here for study and research or if they are
here to steal our secrets. The sheer numbers defy complete vetting or
counterintelligence coverage.
In 2003, for example, the State Department granted about 27,000
visas to Chinese ``specialty workers,'' the H1-B visa. Some of these
were intra-company transfers coming to the United States from US firms
operating in China. Between 1993 and 2003, the United States has
granted an average of 40,000 immigrant visas to Chinese each year. The
sheer magnitude if these numbers presents a great challenge to the
Federal Bureau of Investigation, particularly when the US is also
concerned about terrorism, which occupies a lot of investigative time
for agents.
The Chinese People's Liberation Army and the defense establishment
in China started programs in the late 1970s and 1980s to create
companies designed to bring in needed defense technology; the goal was
to produce defense goods for the PLA and for sale to other countries.
The General Political Department of the People's Liberation Army
started a proprietary company, Kaili, or Kerry Corporation, that for
years operated in the U.S. as a real estate and investment company. The
General Equipment Department of the PLA operated a proprietary company,
Polytechnologies, or Baoli, that had offices here in the U.S. In
addition, the General Logistics Department operated a proprietary
called Xinshidai, or New Era, that had offices in our nation and
continues to be responsible for a network on PLA manufacturing plants
in China. These technically are independent legal entities under
Chinese law, but the Central Military Commission of the Chinese
Communist Party established them to serve the interests of the PLA and
the military industrial complex. Active or retired officers of the PLA
or their families originally staffed these companies. The PLA and
related defense science and technology research and development
organizations in China regularly operate trade fairs to attract
American high technology into China.
The Deputy Undersecretary of Defense for Technology Security and
Counterproliferation has testified that there are between 2,000 and
3,000 Chinese front companies operating in the United States to gather
secret or proprietary information, much of which is national security
technology or information. The deputy director of the Federal Bureau of
Investigation for counterintelligence recently put the number of
Chinese front companies in the U.S. at over 3,200. Many of these front
companies are the spawn of the military proprietary companies discussed
in the preceding paragraph.
The nature of the Chinese state complicates the problem of knowing
what the large numbers of travelers and students from China are
actually doing. China is still an authoritarian, one-party state led by
the Chinese Communist Party with a pervasive intelligence and security
apparatus. The Chinese government is able to identify potential
collectors of information and, if necessary, to coerce them to carry
out missions on behalf of the government because of the lack of civil
liberties in China. Let me quote the first three sentences of Chapter
1, Article 1, of the Chinese Constitution: ``The People's Republic of
China is a socialist state under the people's democratic dictatorship
led by the working class and based on the alliance of workers and
peasants. The socialist system is the basic system of the People's
Republic of China. Disruption of the socialist system by any
organization or individual is prohibited.''
The People's Republic of China is methodical in its programs to
gather information from abroad. In March 1986, the PRC launched a
national high technology research and development program with the
specific goal of benefiting China's medium and long-term high
technology development. This centralized program, known as the ``863
Program'' for the date when it was announced, allocates money to
experts in China to acquire and develop bio-technology, space
technology, information technology, laser technology, automation
technology, energy technology and advanced materials. The 863 program
was proposed by China's strategic weapons scientists to emphasize
strategic civil and military technology development. Thousands of
students and scientists were sent abroad by China over the years to
pursue critical civil and military, dual-use technologies. This
practice still continues. When I was at the American Embassy in China
and conducted due diligence checks to confirm the nature of Chinese
companies seeking to do high technology business in the United States I
most often found that the address identified for a company on a visa
application turned out to be a People's Liberation Army or PRC
government defense research institute. Thus, the United States faces an
organized program out of China that is designed to gather high
technology data and equipment of military use.
My colleague today, Mr Maynard Anderson, will discuss some of the
ways that our government and industry can defend against intelligence
gathering by China through defensive counterintelligence and security
education programs. It is also important to know that we have other
programs to screen out people coming to the United States to gather our
trade or military secrets. In January 1998, the VISAS MANTIS program
was developed to assist the American law enforcement and intelligence
communities in securing U.S.-produced goods and information that are
vulnerable to theft. Travelers are subject to a world-wide name-check
and vetting procedure when they apply for visas. The security
objectives of this program are to prevent the proliferation of weapons
of mass destruction and missile delivery systems; to restrain the
development of destabilizing conventional military capabilities in
certain regions; to prevent the transfer of arms and sensitive dual-use
items to terrorists; and to maintain United States advantages in
militarily critical technologies. This program operates effectively and
can vet a Chinese student in as few as 13 days. Non-students may take
longer, as many as 56 days. However, I can tell you based on my trip to
China two weeks ago that the American Embassy in Beijing and the
Consulate in Guanzhou are able to process and vet in about two weeks
visas for non-student travelers who fully and accurately outline the
purpose and itinerary of their trip. Still, many U.S. companies
complain about delays in getting visas for travelers they want to bring
to the United States. Automation and data-mining software can speed
visa processing to ensure these companies can be competitive. The
government also operates a ``technology alert list'' to identify legal
travelers from China that may benefit from exposure to advanced U.S.
technology with military application. Of course, the consular officers
manning visa lines in embassies must be trained to look for signs of
espionage for screening to be effective.
Many provinces and municipalities in China now operate high
technology zones and ``incubator parks'' specifically designed to
attract back Chinese nationals who have studied or worked overseas in
critical high technology areas. When students or entrpreneurs return
with skills or knowledge that the central government deems critical
they are given free office space in the parks, loans, financial aid,
and administrative help in setting up a business designed to bring in
foreign investment and technology. Their companies are given tax
holidays. Innovative programs such as at Beijing's Zhongguancun High
Technology Park and Guangzhou's High Technology Economic and Trade Zone
get central government help. These are admirable programs that will
develop entrpreneurial skills among well-educated Chinese citizens.
However, as students and employees of U.S. companies return home, it is
important to know that they are not taking back American economic or
military secrets. Good counterintelligence and industrial security
programs are very important to U.S. security given this threat.
Mr. Chairman, the enforcement of intellectual property protection
laws in China is spotty and inconsistent at best. This is one of the
major complaints of American high technology companies about China's
compliance with its obligations under the World Trade Agreement. It
will certainly be a subject discussed by President Bush and Chinese
President Hu Jintao this week. The tendency to steal intellectual
property and high technology secrets in China is worsened when
intellectual property laws are not enforced there. And the problem is
further exacerbated when centralized Chinese government programs, such
as the ``863 Program'' I mentioned earlier in my testimony, are
specifically designed to acquire foreign high techology with military
application. This only creates a climate inside China that rewards
stealing secrets.
I believe that U.S. government security, intelligence and law
enforcement agencies must focus on the national security. They should
be looking for acts of espionage and for violations of the Arms Export
Control Act or the Export Administration Act. When it comes to
corporate or industrial espionage that is not a matter of national
security, I believe that the government owes American companies a good
legal infrastructure to protect trademarks, patents and copyrights; a
system of education on industrial security; and a strong effort to
ensure that China meets its own obligations to create a rule of law
that protects the right of ownership and intellectual property.
However, I do not believe that American intelligence or security
agencies should focus on forms of economic espionage that do not
involve national security information. From the standpoint of
Congressional action, my view is that the Congress should reconsider
the Export Administration Act with a view toward ensuring that its
provisions meet the needs of 21st century technology. The 1979 Export
Administrtion Act expired in 2001. The Senate passed a new Act in 2001,
but no revision passed the House. And the Executive Branch must
regularly review the Commodity Control List to ensure that appropriate
national security controls on exports protect the nation's security but
do not unduly restrict the ability of American industry to compete in
the world market. Generally, technologies that are widely available on
the world market and not unique to the United States should not be
unduly restricted unless they can be subject to mulitlateral export
controls.
Finally, we cannot become paranoid and suspect that every traveler,
student and businessman from China is a spy or is out to steal
technology. Many of the people that come to the United States absorb
our values and bring them home. We must keep in mind that in earlier
decades, in places like the Republic of China on Taiwan and in South
Korea, the steady flow of returning students and immigrants who were
exposed to American values and principles eventually eroded
dictatorships and produced multi-party democracies. The prudent course
of action for the United States is to maintain law enforcement
programs, counterintelligence programs, security education and
industrial security programs as the means to protect our nation.
Thank you for your invitation to testify today.